Like We Said, Policymakers Are Focusing on the Wrong Deficit

New York Times economist David Leonhardt makes two simple points in today’s paper that we made in our release last week underscoring the need for more action to create jobs.

First, output in the United States has rebounded thanks to the Recovery Act, surpassing its level before the recession. The Act, according to our estimates, saved 400,000 jobs in Pennsylvania alone.

Leonhardt presents a neat graph comparing U.S. output trends to Germany and Britain since 2007. In Britain, within which the conservative-liberal government is being advised by the ghost of Herbert Hoover, output is still 4% lower than its pre-recession peak. As in neighboring New Jersey, sharp spending cuts in Britain have translated into large numbers of lost jobs.

The second point Leonhardt makes is that the immediate problem in the economy remains the fragility of the recovery — i.e., the jobs deficit. That’s why the Obama Administration needs to push back hard on deep federal spending cuts. It's also why, in Pennsylvania, we need to keep fighting for a balanced approach to the state budget. Balancing the budget through cuts alone means looking more like New Jersey — or Britain — a year from now.

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